LAHORE: Lahore Chamber of Commerce and Industry fears a drastic cut in tractors production in wake of sharp rise in General Sales Tax and urged the government to bring it down to 10 per cent in the larger interest of the agricultural economy of the country.
This was stated by LCCI President Engineer Sohail Lashari while he was talking to a four-member delegation of Pakistan Association of Automotive Parts Accessories Manufacturers (PAAPAM) led by its Chairman Usman Aslam Malik. The delegation further comprised of Mumshad Ali, Tariq Nazir and Nabeel Hashmi.
LCCI President said that the raise in GST on tractors would also challenge the food security of the country therefore it needs to be brought down to the previous level of 10 per cent without any further delay and for the sake of inflation hit masses. Lashari also apprehended a severe blow to the domestic tractor industry because of the high cost of local tractors which would force the farming community to import tractors.
He said that it was very unfortunate that despite that fact that Pakistani tractors are the cheapest in the world due to 95 per cent local components, they are still out of reach Pakistani farmers. Lashari said that the tractor industry and agriculture hold huge export potential for the country and if the right long-term policies, evolved in consultation with the stake-holders, were put in place then these two sectors could be a source of huge export earnings for Pakistan.
The PAPAAM delegation informed the LCCI office-bearers that after a short surge in demand in the month of December last in anticipation of GST rise from January 1, 2014, the current financial year will close with tractor production barely touching 30,000 units.
The delegation members said that in the previous years, the farmers were supported by 0% GST regime for tractors, along with provincial and federal tractor subsidy schemes and Zarai Taraqiati Bank (ZTBL) loaning.
They further complained that in the absence of such measures in the current year, tractor industry will be operating below 50% capacity, meaning a rise in unemployment and drop in government revenue collected from this industry which includes 300 plus auto part units across the country. The gains made in revenue collection in the form of GST from the farmers will be annulled by revenue drop due to low tractor production from the tractor industry. FBR will collect over Rs 100,000 on a 50 hp tractor and over Rs 170,000 from an 85 hp tractor. This tax is to be borne by the farmer.
Tractor production touched 70,000 units mark in 2010-11 and then declined to 50,000 units in 2011-12, with this year expected to close with 30,000 units on sale. This decline is attributed to decline in support from the government to the farming sector and tractor industry. Pakistan still lags behind India in farm mechanization level and 700,000 more tractors are required to match hp per Hectare of India.